Adam Smith From The Wealth of Nations 1776 Of Colonies

Introduction

Adam Smith, a brilliant eighteenth-century
Scottish political economist, had the advantage of judging the
significance ol colonies by a rigorous examination
based on the colonial experience of 300 years. His
overview has a built-in bias: he strongly disapproved
of excessive regulation of colonial trade by parent
countries. But his analysis is rich with insight and remarkably
dispassionate in its argument. Adam Smith
recognized that the discovery of the New World not
only brought wealth and prosperity to the Old World,
but that it also marked a divide in the history of
mankind. The passage that follows is the work of
this economic theorist who discusses problems in a
language readily understandable by everyone.

Adam Smith had retired from a professorship at
Glasgow University and Was living in France in 1764-5
when he began his great work, The Wealth of Nations.
The book was being written all during the years of
strife between Britain and her colonies, but it was not
published until 1776. In the passages which follow,
Smith points to the impossibility of monopolizing the
benefits of colonies, and pessimistically calculates the
cost of empire, but the book appeared too late to have
any effect upon British policy. Because the
Declaration
of Independence and The Wealth of Nations, the political
and economic reliations of empire and mercantilism,
appeared in the same year, historians have
often designated 1776 as one of the turning points in
modern history. The text On the cost of Empire, the eloquent
exhortation to the rulers of Britain to awaken from
their grandiose dreams of empire, is the closing passage
of Smith's book.

Of the advantages which Europe has derived from the discovery of America.

Those advantages may be divided, first, into the general
advantages which Europe, considered as one great country, has derived from those great events; and, secondly
great events; and secondly, into the particular advantages which each colonizing
country
has derived from the colonles which particulars belong
to it, in consequence of the authority or dominion which
it exercises over them.

The general advantages which Europe, considered as
one great country, has derived from the discovery and
colonization of America, consist, first, in the increase of
its enjoyments; and, secondly, in the augmentation of its
industry.

The surplus produce of America, imported into Europe,
furnishes the inbabitants of this great continent with
a variety of commodities which they could not Otherwise
have possessed, some for conveniency and use, some for
pleasure, and some for ornament, and thereby contributes
to increase their enjoyments.

The discovery and colonization of America, it will
readily be allowed, have contributed to augment the in dustry, first, of all
the countries which trade to it directly;
such as Spain, Portugal, France, and England; and, secondly, of all those which,
without trading to it directly,
send, through the medium of other countries, goods to it
of their own produce; such as Austrian Flanders, and
some provinces of Germany, which, through the medium
of the countries before mentioned, send to it a considerable quantity of linen
and other goods. All such countries
have evidently gained a more extensive market for their
surplus produce, and must tonsequently have been encouraged to increase its
quantity.

But, that those great events should likewise have contributed to
encourage the industry of countries, such as
Hungary and Poland, which may never, perhaps, have
sent a single commodity of their own produce to America, is not, perhaps,
altogether so evident. That those events
have done so, however, cannot be doubted. Some part of
the produce of America is consumed in Hungary and
Poland, and there is some demand there for the sugar,
chocolate, and tobacco, of that new quarter of the world.
But those commodities must be purchased with something
which is either the produce of the industry of Hungary
and Poland, or with something which had been purchased
with some part of that produce. Those commodities of
America are new values, new equivalents, introduced into
Hungary and Poland to be exchanged there for the surplus produce of those
countries. By being carried thither
they create a new and more extensive market for that surplus produce. They
raise its value, and thereby contribute
to encourage its increase. Though no part of it may ever
be carried to America, it may be carried to other countries
which purchase it with a part of their share of the surplus produce of America;
and its may find a market by means
of the circulation of that trade which was originally put
into motion by the surplus produce of America.

Those great events may even have contributed increase the enjoyments,
and to augment the industry of
countries which not only never sent any commodities to
America, but never received any from it. Even such countries
may have received a greater abundance if other commodities from countries of
which the surplus produce had
been augmented by means of the American trade. This
greater abundance, as it must necessarily have increase
their enjoyments, so it must likewise have augmented their
industry. A greater number of new equivalents of some
kind or other must have been presented to them to be exchanged for the surplus
produce of that industry. A more
extensive market must have been created for that surplus
produce, so as to raise its value, and thereby encourag
its increase. The mass of commodities annually thrown
into the great circle of European commerce, and by it
various revolutions annually distributed among all the different nations
comprehended within it, must have been
augmented by the whole surplus produce of America. A
greater share of this greater mass, therefore, is likely to
have fallen to each of those nations, to have increase
their enjoyments, and augmented their industry....

The particular advantages which each colonizing country derives from the
colonies which particularly belong to it, are of two different kinds; first,
those common advantages which every empire derives from the provinces subject
to its dominion; and, secondly, those peculiar advantages which are supposed to
result from provinces of so
very peculiar a nature as the European colonies of America...

The discovery of America, and that of a passage to
the East Indies by the Cape of Good Hope, are the two
greatest and most important events recorded in the history
of mankind. Their consequences have already been veryb
great: but, in the short period of between two and three
centuries which has elapsed since these discoveries were
made, it is impossible that the whole extent of their consequences can have been
seen. What benefits, or what misfortunes to mankind may hereafter result from
those great
events, no human wisdom can foresee. By uniting, in some
measure, the most distant parts of the world, by enabling
them to relieve one another's wants, to increase one another's enjoyments, and
to encourage one another's industry, their general tendency would seem to be
beneficial.

In the mean time, one of the principal effects of those
discoveries has been to raise the mercantile system to a
degree of splendour and glory which it could never otherwise have attained to.
It is the object of that system to
enrich a great nation rather by trade and manufactures
than by the improvement and cultivation of land, rather
by the industry of the towns than by that of the country.
But, in consequence of those discoveries, the commercial
towns of Europe, instead of being the manufacturers and
carriers for but a very small part of the world (that part
of Europe which is washed by the Atlantic ocean, and the
countries which lie round the Baltic and Mediterranean
seas), have now become the manufacturers for the numerous and thriving
cultivators of America, and the carriers,
and in some respects the manufacturers too, for almost all
the different nations of Asia, Africa, and America. Two
new worlds have been opened to their industry, each of
them much greater and more extensive than the old one,
and the market of one of them growing still greater and
greater every day....